Question 1

What is GNP using the table shown?

Accepted Answer

A) 5,570 
B) 5,630 
C) 6,220 
D) 6,250 
A) 5,570 
B) 5,630 
C) 6,220 
D) 6,250

Question 2

One of the limitations of aggregate accounting is that:

Accepted Answer

A) it includes market transactions that should be excluded. 
B) it doesn't take depreciation into account. 
C) it measures market activity, not social welfare. 
D) there isn't enough data available in most developed countries to have national income accounts. 
A) it includes market transactions that should be excluded. 
B) it doesn't take depreciation into account. 
C) it measures market activity, not social welfare. 
D) there isn't enough data available in most developed countries to have national income accounts.

Question 3

If economic activity increases, it follows that economic welfare:

Accepted Answer

A) increases as more goods and services become available. 
B) decreases as more resources are depleted. 
C) does not change since it does not depend on the level of economic activity. 
D) may increase, decrease, or remain unchanged depending on the nature of the increase in economic activity. 
A) increases as more goods and services become available. 
B) decreases as more resources are depleted. 
C) does not change since it does not depend on the level of economic activity. 
D) may increase, decrease, or remain unchanged depending on the nature of the increase in economic activity.

Question 4

The U.S.produces and sells millions of types of products.To add them up to a single aggregate, each good is weighted by its:

Accepted Answer

A) cost of production. 
B) market price. 
C) utility to consumers. 
D) contribution to corporate profits. 
A) cost of production. 
B) market price. 
C) utility to consumers. 
D) contribution to corporate profits.

Question 5

Your visit to the dentist, college tuition, and any commissions earned by a used car salesman are all included in GDP.

Accepted Answer

A) True 
 B)False

Question 6

If the percent change in nominal GDP is 5% and inflation is 3%, the percent change in real GDP is:

Accepted Answer

A) 0%. 
B) 2% 
C) 8%. 
D) 15%. 
A) 0%. 
B) 2% 
C) 8%. 
D) 15%.

Question 7

The largest component of aggregate income is:

Accepted Answer

A) interest. 
B) rents. 
C) employee compensation. 
D) profits. 
A) interest. 
B) rents. 
C) employee compensation. 
D) profits.

Question 8

Which of the following statements about aggregate accounting is false?

Accepted Answer

A) It provides a way of measuring total, or aggregate, production. 
B) It provides a way of measuring how much a nation is producing and consuming. 
C) It did not exist before the 1930s because economists focused on microeconomics before the 1930s. 
D) It is the best way to measure social welfare for an economy. 
A) It provides a way of measuring total, or aggregate, production. 
B) It provides a way of measuring how much a nation is producing and consuming. 
C) It did not exist before the 1930s because economists focused on microeconomics before the 1930s. 
D) It is the best way to measure social welfare for an economy.

Question 9

If the percent change in nominal GDP is 3% and inflation is 4%, the percent change in real GDP is:

Accepted Answer

A) -1%. 
B) 0% 
C) 1%. 
D) 2%. 
A) -1%. 
B) 0% 
C) 1%. 
D) 2%.

Question 10

One reason economists have begun focusing on the Personal Consumption Expenditure measure for inflation is that the PCE deflator:

Accepted Answer

A) takes the exchange rate value of the dollar into account. 
B) weights food more because food is a rising percent of expenditures. 
C) allows for a changing basket of goods. 
D) includes the price of assets such as stock portfolios. 
A) takes the exchange rate value of the dollar into account. 
B) weights food more because food is a rising percent of expenditures. 
C) allows for a changing basket of goods. 
D) includes the price of assets such as stock portfolios.

Question 11

What is net exports using the information shown?

Accepted Answer

A) -100 
B) 100 
C) 850 
D) 950 
A) -100 
B) 100 
C) 850 
D) 950

Question 12

If nominal wealth increases faster than real wealth:

Accepted Answer

A) real wealth must eventually decline. 
B) real wealth will eventually rise faster in order to catch up. 
C) asset inflation has occurred. 
D) society is better off than if nominal wealth growth had matched real wealth growth. 
A) real wealth must eventually decline. 
B) real wealth will eventually rise faster in order to catch up. 
C) asset inflation has occurred. 
D) society is better off than if nominal wealth growth had matched real wealth growth.

Question 13

GDP is a good measure of:

Accepted Answer

A) relative welfare in various countries. 
B) relative prices in various countries. 
C) relative living standards in various countries. 
D) market activities at market prices. 
A) relative welfare in various countries. 
B) relative prices in various countries. 
C) relative living standards in various countries. 
D) market activities at market prices.

Question 14

If the nominal interest rate is 2% and inflation is 3%, the real interest rate is:

Accepted Answer

A) -1%. 
B) 0% 
C) 1%. 
D) 2%. 
A) -1%. 
B) 0% 
C) 1%. 
D) 2%.

Question 15

GDP is $7 trillion.If consumption is $3.5 trillion, investment is $1.4 trillion, and government purchases are $2.1 trillion, then:

Accepted Answer

A) exports are equal to imports. 
B) exports exceed imports. 
C) imports exceed exports. 
D) net exports cannot be determined from the available information. 
A) exports are equal to imports. 
B) exports exceed imports. 
C) imports exceed exports. 
D) net exports cannot be determined from the available information.

Question 16

The total market value of all final goods and services produced in a country in a year is:

Accepted Answer

A) NNP. 
B) GNP. 
C) NDP. 
D) GDP. 
A) NNP. 
B) GNP. 
C) NDP. 
D) GDP.

Question 17

If U.S.GNP exceeds GDP by approximately $133 billion,

Accepted Answer

A) U.S.factor income earned abroad exceeded foreign factor income by $133 billion. 
B) U.S.factor income earned abroad was $133 billion less than foreign factor income. 
C) U.S.depreciation was $133 billion. 
D) U.S.depreciation was -$133 billion. 
A) U.S.factor income earned abroad exceeded foreign factor income by $133 billion. 
B) U.S.factor income earned abroad was $133 billion less than foreign factor income. 
C) U.S.depreciation was $133 billion. 
D) U.S.depreciation was -$133 billion.

Question 18

Aggregate income is a measure of:

Accepted Answer

A) household and business earnings from the sale of productive resources. 
B) the market value of total output. 
C) income households have available to spend before paying personal taxes. 
D) income households have available to spend after paying personal taxes. 
A) household and business earnings from the sale of productive resources. 
B) the market value of total output. 
C) income households have available to spend before paying personal taxes. 
D) income households have available to spend after paying personal taxes.

Question 19

In comparing the per capita GDPs of two countries, purchasing power parity adjusts for differences in:

Accepted Answer

A) exchange rates. 
B) non-market activities. 
C) populations. 
D) prices. 
A) exchange rates. 
B) non-market activities. 
C) populations. 
D) prices.

Question 20

What are net exports using the table shown?

Accepted Answer

A) 170 
B) 200 
C) 450 
D) 650 
A) 170 
B) 200 
C) 450 
D) 650

Exam 25: Measuring and Describing the Aggregate Economy

What is GNP using the table shown?

One of the limitations of aggregate accounting is that:

If economic activity increases, it follows that economic welfare:

The U.S.produces and sells millions of types of products.To add them up to a single aggregate, each good is weighted by its:

Your visit to the dentist, college tuition, and any commissions earned by a used car salesman are all included in GDP.

If the percent change in nominal GDP is 5% and inflation is 3%, the percent change in real GDP is:

The largest component of aggregate income is:

Which of the following statements about aggregate accounting is false?

If the percent change in nominal GDP is 3% and inflation is 4%, the percent change in real GDP is:

One reason economists have begun focusing on the Personal Consumption Expenditure measure for inflation is that the PCE deflator:

What is net exports using the information shown?

If nominal wealth increases faster than real wealth:

GDP is a good measure of:

If the nominal interest rate is 2% and inflation is 3%, the real interest rate is:

GDP is $7 trillion.If consumption is $3.5 trillion, investment is $1.4 trillion, and government purchases are $2.1 trillion, then:

The total market value of all final goods and services produced in a country in a year is:

If U.S.GNP exceeds GDP by approximately $133 billion,

Aggregate income is a measure of:

In comparing the per capita GDPs of two countries, purchasing power parity adjusts for differences in:

What are net exports using the table shown?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Economic Growth, Business Cycles, and Unemployment

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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